County meets deadline to make payment to bank for 2025 TAN

The Washington County government made it to the bank on time, paying its 2025 tax-anticipation note (TAN) to Machias Savings Bank on February 18, two days before the due date.

The county ended up using $1.87 million from cash on hand to pay off the $6.996 million of principal and interest due on the 2025 TAN. Out of 43 municipalities in the county, including the Passamaquoddy Tribe, a total of 35, or over 80%, committed to prepaying $5.75 million so the county could pay the 2025 TAN, according to Renee Gray, the county manager. Two of the towns had not paid on their commitments before the TAN payment was made to the bank and one town only had made a partial payment, so the county ended up having to use more of its available cash.

While the county has avoided defaulting on the loan from the bank, it still has much work to do to get its fiscal house in order. Machias Savings Bank has approved providing $7 million for the county's 2026 TAN, to be available in two installments. However, the county's bond counsel, Bernstein Shur, approved only just over $4 million to be borrowed, based on their cash-flow analysis, according to Gray. The county will draw down only the amount needed for cash flow.

Gray comments, "We're hoping that when the towns receive their tax bills they will pay them as soon as possible or on monthly installments so the county won't have to pay on the TAN at all." She notes that the county had to pay $240,000 in interest on the 2025 TAN.

If the $4 million approved by the bond counsel is not sufficient funding to maintain the cash flow, the county may need to go back to the bank for more funding, she says. "If the cash flow takes another trajectory, we could go to the bank for more."

"Once the 2026 TAN is available and we get the tax bills sent out, the county will be able to breathe a sigh of relief," Gray says. She was hoping the TAN funding would be available the week of February 23 so payroll could continue to be met.

While approving the 2026 TAN in two installments, the bank did impose restrictions on the county's borrowing of the second portion of $2 million, including that the 2023 and 2024 audits be completed by the end of June. However, noting that it would be "impossible to get both years done," Gray says that a verbal agreement was reached with the bank that pre-audits will be completed by then. The pre-audits will involve collecting all of the documentation from the county's books so that they will be ready to be audited. The audits can then be completed in a shorter time frame. The bank also stipulated that a full-time finance director needs to be hired by the county and comparisons on monthly financial performance and budget projections in 2026 must be provided to the bank before the second installment can be approved.

Other steps to improve the county's financial operations are also being taken. Discussions are ongoing about changing the county's fiscal year of January to December to a July-to-June year, beginning in 2028. That change would help eliminate the need for tax-anticipation notes, since most towns have July-to-June fiscal years. In addition, Washington County residents will be voting on a referendum question in November concerning whether the county treasurer should be appointed by the county commissioners instead of elected by the voters.